TIDMNTV
23 June 2021
NORTHERN 2 VCT PLC
ANNUAL FINANCIAL REPORT FOR THE YEARED 31 MARCH 2021
Northern 2 VCT PLC is a Venture Capital Trust (VCT) managed by
Mercia Fund Management Limited. It invests mainly in unquoted
venture capital holdings and aims to provide high long-term
tax-free returns to shareholders through a combination of dividend
yield and capital growth.
Financial Summary (comparative figures as at 31 March 2020):
2021 2020
---------------- ----------------
Net assets GBP115.5m GBP74.4m
Net asset value per share 71.3p 53.5p
Return per share:
Revenue 0.3p 0.2p
Capital 21.5p (7.2)p
Total 21.8p (7.0)p
Dividend per share for the year:
Interim dividend 2.0p 2.0p
Second interim (special) dividend 4.0p --
Proposed final dividend 1.5p 1.5p
Total 7.5p 3.5p
Cumulative return to shareholders since launch:
Net asset value per share 71.3p 53.5p
Dividends paid per share* 124.9p 121.4p
Net asset value plus dividends paid per share 196.2p 174.9p
Mid-market share price at end of year 61.0p 47.5p
Share price discount to net asset value 14.5% 11.2%
Tax-free dividend yield (based on net asset value
per share at the start of year)
Excluding special dividend 6.5% 5.4%
Including special dividend 14.0% N/A
*Excluding proposed second interim and final dividends payable
on 10 September 2021
Enquiries:
Simon John/James Bryce, NVM Private Equity LLP - 0191 244
6000
Martin Glanfield, Chief Financial Officer, Mercia Asset
Management PLC -- 0330 223 1430
Website:
https://www.globenewswire.com/Tracker?data=ynxKAl5pKn8X4T9efe4uKC2qDZweb-jbSHVZa0sYT4VuY1dtUqhHVTwm0aViS3cdcyrTYmTtVJeR1uDRbl2xPFqSrdF2DygLe8bNMWHMHhI=
www.mercia.co.uk/vcts
CHAIRMAN'S STATEMENT
I am delighted to report that our company has performed very
well over the past 12 months, despite the challenging environment
created by the COVID-19 pandemic. Two investments in particular
have made a major contribution to the year's results, but it is
pleasing to note that a high proportion of our investee companies
have shown resilience in response to the changing situation and
have adapted where necessary so as to operate effectively. Great
credit is due to the management teams involved and also to our
investment manager, Mercia, which has provided close support to the
portfolio whilst working within the various restrictions introduced
by the Government.
Results and dividend
In the year ended 31 March 2021 the company achieved a return of
21.8 pence per share (2020: negative return of 7.0 pence),
equivalent to 40.7% of the opening net asset value (NAV) per share.
The NAV per share as at 31 March 2021, after deducting dividends
paid during the year of 3.5 pence, was 71.3 pence compared with
53.5 pence as at 31 March 2020.
A year ago the significance of the pandemic was just becoming
apparent and it was appropriate that we adjusted the holding values
of more than half of our portfolio companies downwards at 31 March
2020 to reflect the general uncertainty about the future. 12 months
on, we have a better appreciation of the impact of COVID-19 and the
results for the year include not only net realised gains of GBP9.0
million on investment sales but also an overall uplift of GBP29.0
million in the directors' valuation of the continuing portfolio,
reflecting strong performance by a number of our unquoted holdings.
This uplift has been substantially underpinned by the successful
partial exit from the investment in Entertainment Magpie Group
shortly after the year end.
The excellent results for the year have triggered a
performance-related investment management fee of GBP1.7 million
under the terms of the management agreement. Following the fall in
NAV during the preceding financial, the agreement requires a
recovery in the NAV to a prescribed level before a performance fee
is capable of being paid. This is the first time in four years that
a performance-related fee has been payable.
Three years ago we set an objective of paying an annual dividend
representing a yield of at least 5% of the opening NAV per share in
each year. A second objective, implicit in this, is that the
company's NAV per share should if possible be protected from
erosion over the medium term. Since 31 March 2018 the NAV per share
has increased by 6.6% from 66.9 pence to 71.3 pence, after taking
account of dividend payments totalling 13.0 pence over the three
years ended 31 March 2021. We can therefore report that we have
achieved our two dividend-related objectives over that period. The
challenge before us is to continue to do so in the future, whilst
recognising that there will inevitably be some fluctuation in the
NAV per share from year to year.
Having already declared an interim dividend of 2.0 pence per
share which was paid in January 2021, your directors now propose an
unchanged final dividend of 1.5 pence. These payments totalling 3.5
pence are equivalent to 6.5% of the opening NAV of 53.5p per share.
However in view of the strong cash flow generated from realisations
both during the year and subsequently, your directors are also
pleased to declare a one-off special dividend of 4.0 pence per
share, making a total of 7.5 pence for the year. The special
dividend will be designated as a second interim dividend for the
year ended 31 March 2021, and will be paid on 10 September 2021 to
shareholders on the register on 20 August 2021. The proposed final
dividend will also, subject to approval by shareholders at the
annual general meeting, be paid on 10 September 2021, so that the
total dividend payment on 10 September will be 5.5 pence per
share.
The target dividend yield will remain subject to regular review
and the level of future dividend distributions will continue to
have regard to the level of returns generated by the company in the
medium term, the timing of investment realisations, the
availability of distributable reserves and continuing compliance
with the VCT scheme rules.
Investment portfolio
Measures intended to reduce the spread of the virus in the UK,
including the temporary closure of certain businesses and
restrictions on the movement of people, were announced just before
the start of the financial year in April 2020. Throughout the
subsequent period, our manager has been working closely with
investee companies to provide strategic and practical support, and
your directors have received frequent progress reports. The
portfolio can be broadly categorised into three groups, as follows.
There are a small number of businesses which have been
significantly impacted, namely those which operate in the leisure
sector and which have been forced to remain closed for much of the
past year. We are cautiously optimistic that most of these
companies can start to recover as the leisure sector fully reopens
during 2021. There is a middle category, in which most of the
portfolio resides, for which there has been some disruption to
operations caused by the pandemic, but where by and large companies
have managed to adjust to a new way of working and continue to
trade reasonably well. The final category includes a small number
of businesses which have benefitted from trends which have been
accelerated by the pandemic, such as companies which employ an
e-commerce operating model, and for which trading has improved
significantly during 2020 and the first half of 2021.
Northern 2 VCT continues to benefit from holding a diversified
portfolio of investments, both in terms of sector exposure and
stage of business maturity. Around 44% by value of our venture
capital portfolio at the year-end comprised "legacy" investments in
more mature businesses acquired under the previous (pre-2018) VCT
rules. This segment of the portfolio produced two good investment
exits during the period under review. Whilst the mature portfolio
will continue to reduce as a percentage of overall capital
invested, we expect that it will continue to provide a series of
profitable exits in the years to come, supporting the overall
return of the company.
Venture capital investment activity
Notwithstanding the difficult conditions experienced since the
onset of the pandemic, further progress has been made on the
development of the portfolio with two new venture capital
investments added to the portfolio during the year and three more
completed in the period since 31 March 2021. We also continue to
experience an encouraging level of follow-on investment activity
across the earlier stage portfolio. GBP5.2 million of capital was
provided to 13 existing investee companies to support further
growth ambitions, representing around 78% by value of investment
activity during the year.
The total of GBP6.7 million invested during the year (2020:
GBP10.1 million) is lower than we have experienced in recent years
and reflects the effort and time spent by the manager in providing
strategic support to the existing portfolio, particularly during
the first half of the year.
It was a busy year for realisation activity, with a number of
notable transactions either completed or in progress as at the
balance sheet date. The highlights during the year were the sale of
Agilitas IT Holdings, generating a return of 8.1 times the original
cost of the investment, and the sale of It's All Good which
registered a return of 3.2 times. In April 2021, subsequent to the
year end, Entertainment Magpie Group was admitted to trading on AIM
under its new name musicMagpie plc. Our original 2015 investment of
GBP1.5 million produced cash proceeds of GBP7.8 million and we have
retained ordinary shares in musicMagpie valued at GBP8.0 million
based on the flotation price. The resulting uplift contributed
significantly to the increase in the overall portfolio valuation as
at 31 March 2021.
Investment manager
It is now 18 months since your board approved the novation of
the company's investment management agreement from NVM Private
Equity to Mercia Fund Management. NVM's VCT investment team
transferred to Mercia en bloc at the outset and has been augmented
by a number of new recruits in various regional centres, as well as
linking in to Mercia's established investment capability and deal
flow. We have monitored the transition process closely and are
broadly satisfied with progress to date.
NVM has continued to play an important role in managing the
legacy portfolio of more mature investments and in providing
administrative, accounting and company secretarial services. It is
envisaged that the transfer of these functions to Mercia will be
completed by March 2022 and I would like to thank the directors and
staff of both organisations for their hard work during this
transitional period.
Share offer and liquidity
As a result of the public share offer launched in January 2020,
24,444,699 new ordinary shares were issued in April 2020 for gross
proceeds of GBP12.5 million.
Our dividend investment scheme, which enables shareholders to
invest their dividends in new ordinary shares free of dealing costs
and with the benefit of the tax reliefs available on new VCT share
subscriptions, continues to operate, with around 16% of total
dividends reinvested by shareholders during the year.
Events over the past 12 months have validated the board's
decision not to launch a public share offer in the 2020/21 tax
year. However as the economy emerges from the worst of the pandemic
we are beginning to see evidence of an upturn in demand for
long-term growth capital for smaller companies in the UK. In order
to have confidence in our capacity to address this demand for
funding over the next two to three years, we intend to launch a new
share offer in the 2021/22 tax year in conjunction with the other
Northern VCTs. Further details will be announced in due course.
We have maintained our policy of being willing to buy back the
company's shares in the market, when necessary in order to maintain
liquidity, at a 5% discount to NAV. During the year, a total of
2,873,212 shares were repurchased for cancellation, equivalent to
approximately 2.1% of the opening share capital.
Annual general meeting
The company's annual general meeting (AGM) will take place on 31
August 2021. The AGM usually provides an excellent opportunity for
shareholders, directors and the manager to meet in person and
exchange views and comment, however in view of the changeable
Government advice concerning non-essential travel and social
distancing, we have decided that the 2021 AGM should not be open to
physical attendance by shareholders. Detailed arrangements are
however being made to enable virtual attendance and shareholders
will be invited to submit proxy votes and ask questions in advance
of as well as at the meeting itself. Details and formal notice of
the AGM are provided in the AGM Circular published at the same time
as the Annual Report and Accounts.
Board of directors
Your board recognises the need to consider succession planning
and with due regard to developing its diversity. That process is a
continuing one and remains a matter of regular board discussion. We
are determined to only ever appoint when we have found high
quality, value adding and experienced people who will contribute to
the board in the interests of shareholders. That process has now
begun using the resources of Mercia's talent management function as
well as other routes to identifying potential candidates. Alastair
Conn will stand down as a director at the AGM in 2022 and it is
envisaged that over the two succeeding years two other directors
will retire, one at each of the AGMs in 2023 and 2024. Shareholders
should be aware that the board goes through a rigorous appraisal
process both collectively and individually during which it
considers the independence of each director in the light of their
performance at, and between, board meetings and when engaging with
the manager. Shareholders can be assured that with the benefit of
their wide experience and expertise your directors, individually
and collectively, can be, and are, frequently extremely challenging
to the manager in respect of the strategic direction of the
company, their view of each investment, and the important issues
around such matters as performance fees and fund raising.
All the directors will be seeking re-election at the 2021 AGM in
accordance with the AIC Code of Corporate Governance.
VCT legislation and qualifying status
The company has continued to meet the stringent and complex
qualifying conditions laid down by HM Revenue & Customs for
maintaining its approval as a VCT. Mercia monitors the position
closely and reports regularly to the board. Philip Hare &
Associates LLP has continued to act as independent adviser to the
company on VCT taxation matters.
Whilst no further amendments to the VCT legislation were
announced by the Chancellor in his 2021 Spring Budget statement, it
is possible that further changes will be made in the future. We
will continue to work closely with Mercia to maintain compliance
with the scheme rules at all times.
Independent auditor
The audit committee regularly reviews the requirements and
deadlines for mandatory audit tendering and rotation. As previously
reported, the audit committee conducted a tender process in
November 2020, as a result of which Mazars LLP, an international
firm of chartered accountants, were appointed as independent
auditor of the company for the year ended 31 March 2021. A
resolution for their re-appointment will be proposed at the
forthcoming AGM.
Outlook
Many financial indices have staged a significant recovery from
the lows experienced in March 2020 as market participants have
digested the success of vaccination programmes and the prospect of
economies fully re-opening during 2021. Against the backdrop of
unprecedented disruption experienced by most businesses over the
past year, your directors have been encouraged by the resilience
exhibited by the portfolio as a whole.
We remain committed to supporting the development and prosperity
of entrepreneurial early stage businesses in the UK and believe
that your company remains well placed to do so.
David Gravells
Chairman 23 June 2021
Extracts from the audited financial statements for the year
ended 31 March 2021 are set out below.
INCOME STATEMENT
for the year ended 31 March 2021
Year ended 31 March 2021 Year ended 31 March 2020
Revenue Capital Total Revenue Capital Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Gain/(loss)
on disposal
of
investments - 8,998 8,998 - (728) (728)
Movements in
fair value
of
investments - 28,956 28,956 - (8,050) (8,050)
---------- ---------- ---------- ---------- ---------- ----------
- 37,954 37,954 - (8,778) (8,778)
Income 1,421 - 1,421 1,052 - 1,052
Investment
management
fee (460) (3,052) (3,512) (431) (1,293) (1,724)
Other
expenses (445) - (445) (369) - (369)
---------- ---------- ---------- ---------- ---------- ----------
Return
before tax 516 34,902 35,418 252 (10,071) (9,819)
Tax on
return (83) 83 - - - -
---------- ---------- ---------- ---------- ---------- ----------
Return after
tax 433 34,985 35,418 252 (10,071) (9,819)
---------- ---------- ---------- ---------- ---------- ----------
Return per
share 0.3p 21.5p 21.8p 0.2p (7.2)p (7.0)p
BALANCE SHEET
as at 31 March 2021
31 March 2021 31 March 2020
GBP000 GBP000
Fixed assets:
Investments 87,078 59,191
---------- ----------
Current assets:
Debtors 1,662 79
Cash and cash equivalents 28,567 15,203
---------- ----------
30,229 15,282
Creditors (amounts falling due within one year) (1,807) (117)
---------- ----------
Net current assets 28,422 15,165
---------- ----------
Net assets 115,500 74,356
---------- ----------
Capital and reserves:
Called-up equity share capital 8,102 6,945
Share premium 20,175 8,401
Capital redemption reserve 511 367
Capital reserve 63,547 61,247
Revaluation reserve 22,343 (2,993)
Revenue reserve 822 389
---------- ----------
Total equity shareholders' funds 115,500 74,356
---------- ----------
Net asset value per share 71.3p 53.5p
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2021
---------------Non-distributable reserves--------------- Distributable reserves Total
Capital
Called up share Share redemption Revaluation Capital Revenue
capital premium reserve reserve* reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2020 6,945 8,401 367 (2,993) 61,247 389 74,356
Return after
tax - - - 25,336 9,649 433 35,418
Dividends
paid - - - - (5,690) - (5,690)
Net proceeds
of share
issues 1,301 11,774 - - - - 13,075
Shares
purchased
for
cancellation (144) - 144 - (1,659) - (1,659)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2021 8,102 20,175 511 22,343 63,547 822 115,500
---------- ---------- ---------- ---------- ---------- ---------- ----------
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2020
---------------Non-distributable reserves--------------- Distributable reserves Total
Capital
Called up share Share redemption Revaluation Capital Revenue
capital premium reserve reserve* reserve reserve
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 April
2019 6,502 1,555 215 6,679 67,341 1,817 84,109
Return after
tax - - - (9,672) (399) 252 (9,819)
Dividends
paid - - - - (3,904) (1,680) (5,584)
Net proceeds
of share
issues 595 6,846 - - - - 7,441
Shares
purchased
for
cancellation (152) - 152 - (1,791) - (1,791)
---------- ---------- ---------- ---------- ---------- ---------- ----------
At 31 March
2020 6,945 8,401 367 (2,993) 61,247 389 74,356
---------- ---------- ---------- ---------- ---------- ---------- ----------
*The revaluation reserve is generally non-distributable other
than that part of the reserve relating to gains/losses on readily
realisable quoted investments, which is distributable.
STATEMENT OF CASH FLOWS
for the year ended 31 March 2021
Year ended Year ended
31 March 2021 31 March 2020
GBP000 GBP000
Cash flows from operating activities:
Return before tax 35,418 (9,819)
Adjustments for:
(Gain)/loss on disposal of investments (8,998) 728
Movements in fair value of investments (28,956) 8,050
(Increase)/decrease in debtors (460) 142
Increase/(decrease) in creditors 1,690 (83)
---------- ----------
Net cash outflow from operating activities (1,306) (982)
---------- ----------
Cash flows from investing activities:
Purchase of investments (9,973) (11,850)
Sale/repayment of investments 18,917 8,006
---------- ----------
Net cash inflow/(outflow) from investing
activities 8,944 (3,844)
---------- ----------
Cash flows from financing activities:
Issue of ordinary shares 13,427 7,568
Share issue expenses (352) (127)
Share subscriptions held pending allotment - (6,468)
Purchase of ordinary shares for cancellation (1,659) (1,791)
Equity dividends paid (5,690) (5,584)
---------- ----------
Net cash inflow/(outflow) from financing
activities 5,726 (6,402)
---------- ----------
Increase/(decrease) in cash and cash equivalents 13,364 (11,228)
Cash and cash equivalents at beginning of year 15,203 26,431
---------- ----------
Cash and cash equivalents at end of year 28,567 15,203
---------- ----------
INVESTMENT PORTFOLIO SUMMARY
as at 31 March 2021
% of
Cost Valuation net assets
GBP000 GBP000 by value
Fifteen largest venture capital
investments:
Entertainment Magpie Group 1,503 17,114 14.8
Lineup Systems 975 5,443 4.7
Currentbody.com 1,867 4,221 3.7
SHE Software Group 2,195 3,629 3.1
Intelling Group 1,142 3,416 3.0
Oddbox 648 3,157 2.7
Sorted Holdings 2,715 3,045 2.6
Buoyant Upholstery 1,057 2,500 2.2
Clarilis 1,828 2,374 2.1
Volumatic Holdings 216 2,228 1.9
Biological Preparations Group 2,166 1,958 1.7
Newcells Biotech 1,612 1,917 1.7
Rockar 1,677 1,831 1.6
Knowledgemotion 1,778 1,781 1.5
Soda Software Labs t.a. Hello Soda 1,499 1,574 1.4
---------- ---------- --------
22,878 56,188 48.7
Other venture capital investments 34,253 22,013 19.4
---------- ---------- --------
Total venture capital investments 57,131 78,201 68.1
Listed equity investments 6,336 7,582 6.6
Listed interest-bearing investments 1,268 1,295 1.1
---------- ---------- --------
Total fixed asset investments 64,735 87,078 75.8
----------
Net current assets 28,422 24.2
---------- --------
Net assets 115,500 100.0
---------- --------
RISK MANAGEMENT
The board carries out a regular and robust assessment of the
risk environment in which the company operates and seeks to
identify new risks as they emerge. The principal and emerging risks
and uncertainties identified by the board which might affect the
company's business model and future performance, and the steps
taken with a view to their mitigation, are as follows:
Investment and liquidity risk: investment in smaller and
unquoted companies, such as those in which the company invests,
involves a higher degree of risk than investment in larger listed
companies because they generally have limited product lines,
markets and financial resources and may be more dependent on key
individuals. The securities of smaller companies in which the
company invests are typically unlisted, making them illiquid, and
this may cause difficulties in valuing and disposing of the
securities. The company may invest in businesses whose shares are
quoted on AIM -- the fact that a share is quoted on AIM does not
mean that it can be readily traded and the spread between the
buying and selling prices of such shares may be wide. Mitigation:
the directors aim to limit the risk attaching to the portfolio as a
whole by careful selection, close monitoring and timely realisation
of investments, by carrying out rigorous due diligence procedures
and maintaining a wide spread of holdings in terms of financing
stage and industry sector, within the rules of the VCT scheme. The
board reviews the investment portfolio with the manager on a
regular basis.
Financial risk: most of the company's investments involve a
medium to long-term commitment and many are illiquid. Mitigation:
the directors consider that it is inappropriate to finance the
company's activities through borrowing except on an occasional
short-term basis. Accordingly they seek to maintain a proportion of
the company's assets in cash or cash equivalents in order to be in
a position to pursue new unquoted investment opportunities and to
make follow-on investments in existing portfolio companies. The
company has very little direct exposure to foreign currency risk
and does not enter into derivative transactions.
Economic risk: events such as economic recession or general
fluctuation in stock markets, exchange rates and interest rates may
affect the valuation of investee companies and their ability to
access adequate financial resources, as well as affecting the
company's own share price and discount to net asset value. The
level of economic risk has been elevated by the COVID-19 pandemic
which caused a global recession during 2020. Mitigation: the
company invests in a diversified portfolio of investments spanning
various industry sectors, and maintains sufficient cash reserves to
be able to provide additional funding to investee companies where
it is appropriate and in the interests of the company to do so. The
manager typically provides an investment executive to actively
support the board of each unquoted investee company. At all times,
and particularly during periods of heightened economic uncertainty,
the investment executives share best practice from across the
portfolio with investee management teams in order to mitigate
economic risk.
Brexit risk: the UK withdrew from the European Union (EU) on 31
January 2020. The process of negotiating longer term trading
arrangements between the UK and the EU is ongoing. The impact on
the future business environment in the UK is therefore difficult to
predict. Mitigation: whilst we do not expect that Brexit will have
a significant impact on the operations of Northern 2 VCT itself,
the board and the manager follow Brexit developments closely with a
view to identifying changes which might affect the company's
investment portfolio. The manager works closely with investee
companies in order to plan for a range of possible outcomes.
Stock market risk: some of the company's investments are quoted
on the London Stock Exchange or AIM and will be subject to market
fluctuations upwards and downwards. External factors such as
terrorist activity or global health crises, such as the COVID-19
pandemic, can negatively impact stock markets worldwide. In times
of adverse sentiment there may be very little, if any, market
demand for shares in smaller companies quoted on AIM. Mitigation:
the company's quoted investments are actively managed by specialist
managers, including Mercia in the case of the AIM-quoted
investments, and the board keeps the portfolio and the actions
taken under ongoing review.
Credit risk: the company holds a number of financial instruments
and cash deposits and is dependent on the counterparties
discharging their commitment. Mitigation: the directors review the
creditworthiness of the counterparties to these instruments and
cash deposits and seek to ensure there is no undue concentration of
credit risk with any one party.
Legislative and regulatory risk: in order to maintain its
approval as a VCT, the company is required to comply with current
VCT legislation in the UK, which reflects the European Commission's
State-aid rules. Changes to the UK legislation in the future could
have an adverse effect on the company's ability to achieve
satisfactory investment returns whilst retaining its VCT approval.
Mitigation: the board and the manager monitor political
developments and where appropriate seek to make representations
either directly or through relevant trade bodies.
Internal control risk: the company's assets could be at risk in
the absence of an appropriate internal control regime which is able
to operate effectively even during times of disruption, such as
that caused by COVID-19. Mitigation: the board regularly reviews
the system of internal controls, both financial and non-financial,
operated by the company and the manager. These include controls
designed to ensure that the company's assets are safeguarded and
that proper accounting records are maintained.
VCT qualifying status risk: while it is the intention of the
directors that the company will be managed so as to continue to
qualify as a VCT, there can be no guarantee that this status will
be maintained. A failure to continue meeting the qualifying
requirements could result in the loss of VCT tax relief, the
company losing its exemption from corporation tax on capital gains,
to shareholders being liable to pay income tax on dividends
received from the company and, in certain circumstances, to
shareholders being required to repay the initial income tax relief
on their investment. Mitigation: the investment manager keeps the
company's VCT qualifying status under continual review and its
reports are reviewed by the board on a quarterly basis. The board
has also retained Philip Hare & Associates LLP to undertake an
independent VCT status monitoring role.
DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the annual report
and financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law they are
required to prepare the financial statements in accordance with UK
Accounting Standards, including FRS 102 "The Financial Reporting
Standard applicable in the UK and Republic of Ireland".
Under company law the directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the company and of its profit or
loss for the year.
In preparing these financial statements, the directors are
required to (i) select suitable accounting policies and then apply
them consistently; (ii) make judgements and estimates that are
reasonable and prudent; (iii) state whether applicable UK
Accounting Standards have been followed, subject to any material
departures disclosed and explained in the financial statements;
(iv) assess the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern; and
(v) use the going concern basis of accounting unless they either
intend to liquidate the company or to cease operations, or have no
realistic alternative but to do so.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the company's
transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that
its financial statements comply with the Companies Act 2006. They
are responsible for such internal control as they determine is
necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error,
and have general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the company and
to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also
responsible for preparing a strategic report, directors' report,
directors' remuneration report and corporate governance statement
that complies with that law and those regulations.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
company's website. Legislation in the UK governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
The directors have confirmed that to the best of their knowledge
(i) the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the company; and (ii) the directors' report and strategic report
include a fair review of the development and performance of the
business and the position of the issuer, together with a
description of the principal risks and uncertainties that they
face.
The directors consider that the annual report and accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the company's
position and performance, business model and strategy.
The directors of the company at the date of this announcement
were Mr D P A Gravells (Chairman), Mr A M Conn, Mr S P Devonshire,
Miss C A McAnulty and Mr F L G Neale.
OTHER MATTERS
The above summary of results for the year ended 31 March 2021
does not constitute statutory financial statements within the
meaning of Section 435 of the Companies Act 2006 and has not been
delivered to the Registrar of Companies. Statutory financial
statements will be filed with the Registrar of Companies in due
course; the independent auditor's report on those financial
statements under Section 495 of the Companies Act 2006 is
unqualified, does not include any reference to matters to which the
auditor drew attention by way of emphasis without qualifying the
report and does not contain a statement under Section 498 (2) or
(3) of the Companies Act 2006.
The calculation of the return per share is based on the profit
after tax for the year of GBP35,418,000
(2020: loss of GBP9,819,000) and on 162,830,534 (2020:
139,793,223) shares, being the weighted average number of shares in
issue during the year.
The calculation of the net asset value per share as at 31 March
2021 is based on the net assets of GBP115,500,000 (2020:
GBP74,356,000) divided by the 162,026,501 (2020: 138,886,797)
ordinary shares in issue at that date.
If approved by shareholders, the proposed final dividend of 1.5
pence per share and the second interim dividend of 4.0 pence per
share for the year ended 31 March 2021 will be paid on 10 September
2021 to shareholders on the register at the close of business on 20
August 2021.
The full annual report including financial statements for the
year ended 31 March 2021 is expected to be posted to shareholders
on or around 30 July 2021 and will be available to the public at
the registered office of the company at Time Central, 32
Gallowgate, Newcastle upon Tyne NE1 4SN and on the company's
website.
Neither the contents of the NVM Private Equity LLP or the Mercia
Asset Management PLC website, nor the contents of any website
accessible from hyperlinks on the NVM Private Equity LLP or Mercia
Asset Management PLC website (or any other website), are
incorporated into, or form part of, this announcement.
(END) Dow Jones Newswires
June 23, 2021 10:00 ET (14:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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